Budget 2018 includes plan to share Canadian tax info with foreign governments

Confidential information on Canadian taxpayers could be shared with law enforcement agencies in more than three dozen countries under a measure to strengthen international co-operation on crime introduced in Finance Minister Bill Morneau’s latest budget.

A 78-page annex to Budget 2018 spells out a plan to allow the sharing of tax information with Canada’s mutual legal assistance partners. The lengthy list of nations includes the U.S., Brazil, Belgium, France, Israel, Russia and China.

The government said the information would be shared to combat serious crime such as terrorism, organized crime, and money laundering.

Speaking in Toronto at the Canadian Club on Thursday morning, Morneau said the government is committed to making sure it is respectful of all Canadians’ rights and freedoms. He did not detail how the government will ensure the privacy of Canadians is not infringed upon.

Conservative national review critic Pat Kelly said Parliament should debate new powers for the government involving personal tax information.

“We are concerned that these important new measures have been buried in the annex of the Budget instead of being introduced in a separate Bill,” he said in a statement to CTV News. “The Liberals need to be upfront with Canadians regarding who will have access to their sensitive and confidential tax information.”

Claudiu Popa, president of Datarisk Canada, said he can appreciate the importance of sharing data globally to catch criminals.

He does, however, have reservations about introducing a policy that would expose information entrusted to the Canada Revenue Agency, such as names, addresses and financial records, in a document few average Canadians will read.

“It is not really a budget item. There isn’t money associated with it, yet there it is, tucked in,” he told CTV News Channel on Thursday. “When you introduce things that look like you are looking for tacit endorsement, or you’re assuming that this is going to constitute informed consent, it tends to erode trust.”

In an age when foreign cybercrime has become part of the regular news cycle, Popa imagines many Canadians will find it difficult to accept that Ottawa could share their tax return with agents of another government.

“We hear in the news that it is a problem when China or Russia are hacking databases and accessing taxpayer information, but here we are saying that given the right context, the right investigation, it will be shared with or without the consent of taxpayers,” he said.

Canada’s mutual legal assistance agreements already allow for a wide range of international co-operation in various types criminal matters.

For example, the Attorney General has the authority to obtain gathering and sending orders for various types of information in relation to serious non-tax offences. But tax information cannot be shared through this process.

Currently, the CRA can co-operate with foreign governments to advance investigations related to tax evasion, but not other offences such as terrorism.

“While many of Canada’s mutual legal assistance partners are able to share tax information in response to a request from Canada for mutual legal assistance, Canada lacks the legal authority to reciprocate,” officials wrote in the budget annex.

Popa worries an expanded information-sharing framework would place more trust in foreign governments, which have not given the Canadian public any assurances about who would see their information, how it would be stored, and for how long.

“Once you share information, it’s out there. Somebody is making a copy. Even if they say they are totally going to destroy the information,” he said. “(You) lose control.”

Popa said any such system should be reviewed annually by Privacy Commissioner Daniel Therrien in order to ensure transparency.

“The privacy commissioner needs to be briefed in detail about all of the cases in which taxpayer information is being shared internationally,” he said. “Especially when it results in a situation where the person being investigated was not in fact doing anything wrong.”

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Eric Ni

Partner of CAN Partners LLP

Financial auditor and advisor since 2006

Extensive experience in both US GAAP and IFRS reporting frameworks

Assisting companies going public and improving internal control and compliances to meet regulatory requirements

Master Degree of Management and Professional Accounting, Rotman School of Business, University of Toronto

Bachelor Degree of Law, Soochow University

Lorne Saltman

Partner, Gardiner Roberts LLP

Bar Admission, Ontario, 1973

Extensive experience in diverse areas of tax practice, including in-depth experience on both the international and domestic levels involving wealth preservation for high-net worth clients, cross-border acquisitions and financings, corporate reorganizations, real estate ventures, and the establishment of offshore trusts and private foundations.

Successful track record in resolving disputes with tax authorities at both the federal and provincial levels, including some experience in tax litigation.

Memberships:

American Bar Association, Business Law Section, Taxation Committee, Advisory Panel

American Bar Foundation

Canadian Bar Association

Canadian Tax Foundation

Hague Academy of International Law

International Bar Association

International Commission of Jurists

International Fiscal Association

International Tax Planning Association

Ontario Bar Association

Society of Trust and Estate Practitioners (STEP)

Toronto Chinese Community Services Association

Academic Background:

Juris Doctor, Osgoode Hall Law School

Bachelor of Science, University of Toronto

Michael Cadesky

Managing Partner, Cadesky Tax

In full-time income tax practice since 1980

Vice-chair, CPA Canada Tax Committee for Small and Medium-Sized Enterprises